Should You Buy PayPal While It's Below $100?

Core Viewpoint - PayPal's stock has significantly declined, losing 77% from its 2021 peak, but the company remains popular with 434 million active users. The leadership overhaul aims to restore growth and investor confidence [1][3]. Company Performance - PayPal's revenue growth has slowed, with an 8% annual increase in 2022 and 2023 compared to double-digit growth during the pandemic. Higher transaction costs and increased investments have pressured margins, resulting in flat profitability [4][5]. - In 2024, PayPal reported $31.8 billion in net revenue, a 7% year-over-year increase, but net income declined by 2% to $4.2 billion due to a 7% rise in operating expenses [5]. - User growth has stagnated, with only a 2.1% increase in active users from Q4 2023 to Q4 2024 [6]. Financial Position - PayPal is debt-free, holding $943 million in net cash, which allows for flexibility in pursuing acquisitions or share repurchases [7]. - The company bought back 92 million shares for $6 billion in 2024, reducing the total share count by 7.4%, and has decreased outstanding shares by nearly 15% over the past three years [8]. Valuation and Growth Prospects - PayPal's stock is currently undervalued, trading at a forward price-to-earnings ratio of 14 to 15, based on projected earnings per share of $4.95 to $5.10 for 2025 [10]. - Management aims for "low teens" non-GAAP EPS growth by 2027, with a long-term target of 20% annual growth, focusing on evolving into a broader commerce platform [12]. Strategic Initiatives - The introduction of PayPal Open aims to consolidate services into a single platform for businesses, reflecting management's vision to power the global economy through enhanced commerce capabilities [11][12]. - The company is at an inflection point, with its attractive valuation and steady profitability suggesting that even modest growth could lead to a stock price rebound [13].